ASEAN must resolve its tax issues
ahead of the ASEAN Economic
Community (2015) for successful
economic integration.
President of the, International Tax and
Investment Centre, Daniel A. Witt said that
“ASEAN will have to answer fundamental
questions and a lot of work remains

02

to be done before 2015, but it can be
accomplished”
Outstanding issues include how to
determine the region’s tax base and which
goods and services are covered
The type of taxes also vary from those
based on volume, prices, ad valorem taxes,
or a mixture
There is no need for a unified tax policy,

Indonesia Re-Arms Itself

Indonesia
Indonesia will resume production
of its own military hardware to
modernise its weaponry.
The House of Representatives on 2
October passed the Defence Industry Law,
enabling its strategic industries to develop
military hardware after more than 20 years
of dormancy
With this law in place, Indonesia will no
longer import military hardware unless
purchases are authorised by the House of
Representatives
The law stipulates that primary defence

industries that produce weaponry and
strategic defence equipment shall come
under the auspices of the Ministry of
Defence while supporting industries shall be
under the Ministry of State Enterprises
China, Russia, and Germany are planning
to supply defence hardware to Indonesia,
but those plans are likely to be altered by
the new law, analysts said
Why it matters: Indonesia aims to develop
its domestic defence industry to cater to
boost sales to South Korea, the Philippines,
Malaysia, Singapore and East Timor
Jakarta Globe (3 October 2012)

but administration must be clarified, for
example, details of how and who will collect
taxes, how revenues are distributed, and
how taxation operates cross-borders have to
be clarified
Witt also emphasised the role of
technology that can help offset risks in
transactions
Business World Online (3 October 2012)

03

ASEAN Exchange Link Lures
Retail Investors

ASEAN
The ASEAN trading link currently
between Singapore and Malaysia
which started on 18 September needs
a strong public relations campaign
to inform investors of the differing
regulatory regimes of the exchanges.
A potential issue is that the broker system
means there is no central clearinghouse,
and transactions are governed by the

standards compared to other ASEAN
jurisdictions
Countries may have to adjust their
regulations before the link can be
implemented – the recent rule change in
Thailand whereby Thai security companies
can now publicise research reports of
foreign securities companies demonstrates
this

relevant exchange’s regulator
The Stock Exchange of Thailand is
expected to join the link in October –
collectively the three account for 67%
of the total market capitalisation of the
ASEAN Exchanges group, which includes
Indonesia, the Philippines and Vietnam’s
two bourses
Singapore, Thailand and Malaysia have
the benefit of high corporate governance

When:
Bursa Malaysia (BM) and Singapore
Exchange (SGX) connected on 18
September 2012. The Stock Exchange of
Thailand (SET) will be added in October
2012.
Why:
1. Promote the growth of the ASEAN
capital market as an asset class
2. Bring more ASEAN investment
opportunities to people
3. Enhance liquidity amongst member
Exchanges

Click here for media factsheet and information on how the trading link works

Thai agriculture
faces the AEC

ASEAN
The ASEAN Economic Community
will open Thailand’s agriculture
sector to ASEAN’s large market
and demand, however Thai farmers
will also face stiff competition from
producers in Vietnam.
Thai farmers will have access to larger
markets especially for sugar, rice, corn,
cassava, palm oil, cocoa, and coffee
Myanmar has the most potential for
agriculture sector growth within the CLMV
(Cambodia, Laos, Myanmar, and Vietnam)
countries
According to a survey, Thai farmers

lack understanding of the AEC, Thailand
is spending 15 times less than Vietnam in
agricultural R&D and 80% of Vietnamese
arable land is covered by the irrigation
system compared to only 25% in Thailand
Thai farmers are encouraged to
improve management systems and form
cooperatives to increase quality control,
increase their knowledge of the AEC, and
try to find high-value add niches such as
halal foods for regional Muslim consumers
There will be more competition in palm
oil between Malaysia and Indonesia
Bangkok Post, My News Hub
(1 October 2012)

Source: SCB EIC analysis based on data from World Bank. FAO. and Department of Labor and Employment, Republic of the Philippines
DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI)
does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and
opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.

05

MYANMAR
MONITOR

Economy
Myanmar seeks to cut gas exports to
Thailand to meet own needs as domestic
power shortages continue to cripple the
economy and scare off potential investors.
Myanmar is hoping to retain 200 million
cubic feet of the 1 billion cubic feet it
exports to Thailand per day. Gas exports to
Thailand increased from US$2.52 billion in
the fiscal year 2010-2011 to US$3.50 billion
in 2011-2012.

06

Full Foreign Ownership?

Vietnam

Asia One (4 October 2012)

The Asian Development Bank has
increased its prediction of economic growth
in Myanmar for the next two years at the
same time it is scaling back its prediction
of growth in the region. ADB now predicts
that growth in Myanmar will be 6.3% and
6.5%, while growth in the region is expected
to be 6.1% and 6.7%, for 2012 and 2013,
respectively.
Mizzima (3 October 2012)

Myanmar is planning to set up seven more
local industrial zones in addition to the 18
existing zones.
Bernama (3 October 2012)

Investment banker Alisher Ali has founded
Myanmar’s first investment bank - Mandalay
Capital. The business is modelled on Eurasia
Capital, a boutique investment bank in Ulan
Bator, Mongolia, founded by Ali in 2008.
Silk Road Finance is Mandalay Capital’s
parent company.
The Irrawaddy (2 October 2012)

Felda Global Ventures plans to develop
a complete supply chain of its three core
businesses – palm oil, sugar cane and
rubber - in Myanmar. The group has signed
a MoU with local partner, Pho La Min
Trading, to explore rubber plantations and
processing.
New Straits Times (1 October 2012)

Politics
President Thein Sein said in an interview
he would accept opposition leader Aung
San Suu Kyi as president if elected, but
added he could not alone amend Myanmar’s
constitution which currently bars her from
power due to a clause that prohibits those
with close foreign relatives from holding
high office.
The Star (30 September 2012)

Foreign Affairs
US President on 5 October signed into
law a measure making it easier for the
United States to back international financial
institutions which support Myanmar’s
reform drive.
New Straits Times (6 October 2012)

Vietnam is proposing to allow
foreigners to take full ownership of
some joint-stock companies and set
up wholly owned securities firms in
an effort to bolster the stock market.
Overseas companies can acquire as
much as 100% of the registered capital of
brokerages, up from the current maximum
of 49%, or establish wholly owned
securities firms if they have been operating
in the banking and insurance industries for
two years and posted a profit in the most
recent two years, according to a draft
measure posted on the State Securities
Commission’s website
Foreign investors are very interested
in buying shares of companies in some
industries such as banks or consumer

07

goods, according to Giang Trung Kien, head
of research at FPT Securities Joint-Stock
Company
Meanwhile, Moody’s Investors Service cut
Vietnam’s credit rating further into junk
territory, citing risks the government will
have to pump money into the country’s
banks and the sector’s limited ability to
support the economy
Moody’s on 5 October downgraded
Vietnam by one notch to B2 with a stable
outlook and said risks to the rating were
balanced going forward
Why it matters: Allowing foreign
investors to increase their stakes in
publicly listed brokerages and joint-stock
companies may boost liquidity in the stock
market
Bloomberg, Wall Street Journal (2 October 2012)

Gearing up for elections,
not AEC
Malaysia, Indonesia, Philippines, Cambodia

As election season looms in several
ASEAN countries, new policies and
campaigns focus on catering to
domestic interest groups with no
clear emphasis on preparing for the
ASEAN Economic Community.
Malaysia recently released the national
budget geared towards an impending
general election, with generous offerings of
education subsidies, smartphone rebates
for young voters, cash handouts, and raises
in public sector salaries
Indonesia’s presidential elections are
scheduled for 2014 and have had an effect
on the mining industry through new policies
that restrict foreigners, say experts, citing
a new law requiring foreign companies to
divest within 10 years

The Philippines is also preparing
for general elections next year and is
committed to anti-corruption and antipoverty campaigns
In Cambodia, two opposition parties have
combined forces to face Hun Sen’s 27 year
tenure in next year’s elections
Why it matters: Despite reduction in
subsidies, Malaysia’s budget does not have
an ASEAN vision. Indonesia’s economic
protectionism in its mining industry is
also not promising. While Aquino’s anticorruption drive is admirable, the lack of
regional outlook reminds us that ASEAN
integration is not on national agendas.
CNBC, CSIS, Bangkok Post, Wall Street Journal,
The Jakarta Globe (2 October 2012)

DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI)
does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and
opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.

08

ASEAN boosts ties with UN, GCC
ASEAN, UN

ASEAN pledges to continue
expanding cooperation with the
United Nations (UN) and the Gulf
Cooperation Council (GCC) in the
fields of trade, investment, education
and culture.
ASEAN made the commitment on the
sidelines of the 67th session of the UN
General Assembly (UNGA) held in New
York recently

09

Going for
Gold

At the ASEAN Foreign Ministers’ meeting
with the UN Secretary General and the
President of the UNGA, the first of its kind
since the adoption of the Joint Declaration
on Comprehensive Partnership between
ASEAN and the UN at the 4th ASEAN-UN
Summit in Bali last November, participants
reviewed the implementation of the
ASEAN-UN Comprehensive Partnership,
based on the joint report by the

10

Secretariats of ASEAN and the UN.
Meanwhile, ASEAN members have
pledged to support each other’s bids for
seats at the United Nations, including
Vietnam’s candidacy for the 2014-16 UN
Human Rights Council tenure
The bloc’s foreign ministers confirmed the
arrangement at the recent Informal ASEAN
Foreign Ministers’ Meeting on the sidelines
of the UNGA
Vietnam Net, Vietnam News (2 October 2012)

Book exchange

Singapore , Indonesia

ASEAN, Thailand

From 1 October, Singapore is
scrapping a 7% tax on gold and
silver in an effort to turn the city
into a precious-metals trading hub
to rival London and Zurich, where
value-added taxes don’t apply to the
investment-grade gold trade.
Singapore, touting its image as a safe,
stable and few-questions-asked haven for
investors, is hoping to store an increasing
amount of gold and silver
Gold sales in Singapore are expected to
jump after the tax change takes hold, in
part, because investors have been holding
off on purchases awaiting the tax break,
according to Singapore’s United Overseas
Bank
Singapore’s position between India and
China, the world’s two biggest gold buyers,
also makes it well-placed to benefit from
growing Asian demand
Meanwhile, Indonesia’s gold production
potential may be hampered by illegal
mining, politicking between central and
regional government and a spate of
demonstrations and violent attacks against
junior gold miners
Indonesia is endowed with the world’s
fifth-largest gold reserves estimated at
3,000 tonnes, is the world’s seventh largest
gold producer with annual output of 111
tonnes in 2011 and the mining industry now
accounts for around 12% of its GDP
Wall Street Journal, Reuters (2 October 2012)

The Publishers and Booksellers
Association of Thailand (Pubat) is
promoting an exchange of literature
between ASEAN members before
the advent of the Asean Economic
Community (AEC) in 2015.
Pubat will push for the campaign at
next month’s meeting of the Asean Book
Publishers Association, where it will
suggest a special rate for publication of

literature under the programme.
In addition, there can be business
matching between publishers, writers and
distributors
These activities may begin at the Bangkok
International Book Fair 2013 next March
The multilingual exchange would educate
the various countries about other cultures
and prepare people for the AEC, Pubat
president Worapan Lokitsataporn said
Bangkok Post (3 October 2012)

Editorial Team: Angela Goh, Manissa van Geyzel, Chayut Setboonsarng
Consultant Editor: Tunku ‘Abidin Muhriz Designer: Iqbal Hakim
DISCLAIMER: The news articles contained in this report are extracted and republished from various credible news sources. As such, CIMB ASEAN Research Institute (CARI)
does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and
opinion contained in this report. Should any information be doubtful, readers are advised to make their own independent evaluation of such information.